Salting Away $116,000 Just Isn't Enough for Rainy Days

Consumer spending accounts for almost 60 percent of Japan's gross domestic product, and, when people here stop spending, the world feels it. To restart its stalled consumers, Tokyo has launched a $120 billion economy-boosting package and is discussing permanent tax cuts.

Critics say these measures won't address deep-rooted structural problems that have led to the economic downturn, and offer a simple reason why it might not even work in the short-term: Consumers like Michiyo Taki (see story above) aren't willing to play along.

The government wasn't looking out for ordinary Japanese when it got the country in the current economic fix, she says, so now they're looking out for themselves. And that means holding on to their money, no matter how badly the government wants them to spend it.

As for the tax cuts, "it simply means more money to save," she says.

If current economic insecurity inspires the Japanese to save, habit is also a factor. In the years after World War II, Japan encouraged its citizens to save to help put the country back on track. They salted away so much that today the average household has just over $116,000 in savings.

Ms. Taki puts money away just as her parents did. But, while they saved to rebuild Japan in the years after World War II, she is saving to weather the storm it's facing today. She deposits her savings in the Japanese postal system (where about 19 percent of Japanese savings are held) and would like to try investing with a foreign firm like Merrill Lynch. Japan's banks, burdened with massive debt and tainted by racketeering scandals, don't inspire her confidence.

"Japan has been affected by a malaise, I thought after [these scandals emerged]," she says. "In this situation, a person like me is never going to spend."